Propel Raises $100 Million to Revamp Financial Services Infrastructure

Investment firm Propel Venture Partners has raised $100 million for its latest fund.

The new funding brings Propel’s total commitments to more $436 million and will be used to invest in “areas where technology and financial services converge,” the company said in a Thursday (July 10) news release.

The release notes that financial services is a major part of the world economy, contributing up to 31% of GDP, and is also one of the largest consumers of technology, accounting for upwards of $600 billion in yearly IT spend. Still, the sector is held back by legacy infrastructure, organizational design and regulatory hurdles, slowing innovation.

“The disequilibrium between financial services incumbents’ technology needs and their ability to quickly innovate creates ample opportunities for startups, no matter the economic climate,” said Propel founder and general partner Jay Reinemann.

“Propel helps execution-focused founders build enduring businesses that rethink how financial value is created, moved and secured. Our portfolio companies consider us true partners and confidants, and we’re committed to helping them shoulder the burden when challenges inevitably arise.”

Founded in 2016, Propel — with long-term limited partner BBVA — has backed 62 companies, with a portfolio that includes Coinbase and Docusign. The firm currently focuses on pre-seed and seed rounds, making investments ranging from $1 million to $4 million.

The company’s latest fund has made five investments, including in “AI-native companies for financial planning and analysis, payment processing infrastructure, and energy infrastructure.”

Recent research and reporting by PYMNTS Intelligence has examined the ways legacy infrastructure can hold back financial services.

The study “Instant Satisfaction: How Real-Time Payments Can Help FIs Win Consumer Loyalty,” for example, found that 73% of banks say they grapple with the legacy infrastructure that’s in place when approaching real-time payments.

This “hampers the ability to deliver those payments (because they are rooted in batch processing), indicating that the transformation toward instant payments is not a demand problem, but what might be termed a supply issue,” PYMNTS wrote earlier this year.

Legacy infrastructure is not enough in a world ruled by pay-by-bank offerings, Ed Dean, vice president of product at Nuvei, said in an interview with PYMNTS last month.

He used the analogy of video game consoles to explain the continuing transformation in payments, saying that “if you didn’t upgrade your console, you couldn’t play the newest games.”